THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

RICHARD QUEST, HOST, QUEST MEANS BUSINESS: It's a case of up, up and away. A small dose of confidence, just what the markets ordered.

Is the ECB the fairy riding to the debt rescue?

And is Facebook too big to fail. Apparently we will have forgotten about it in maybe five year's time.

We have an hour together, I'm Richard Quest. And, yes, I mean business.

Good evening.

There is a brain storming rally underway in New York at this hour, and apparently it is founded firmly on good news about jobs and the global economy. The gains are making up for three days of losses on the Dow. And as you can see the Dow Jones industrial, if we look at it from the year to date, it is showing a very impressive and a very healthy gain. From the beginning at just 10,000, now up towards over 11,000. Even allowing for what happened in the middle of the year.

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Alison Kosik joins me now from the New York Stock Exchange, in New York.

Alison, first of all, we've got a lot to get to here. Why is the Dow up so strongly today?

ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: Well, I'll tell you what, there are so many factors contributing to this rally today, Richard. Let me start with China. China's manufacturing report that came out before the bell today was positive, showing China's economy is growing. Already futures have been rallying on that news.

And then, when we had the opening bell, we had a slew of other reports showing that, you know, things are improving. That we are getting genuinely good news here in the U.S. First of all, manufacturing orders increased in November. Up for the 16th month in a row, here in the U.S., that is great news.

Then, of course, we can't forget the ADP report. That is the payroll processing firm. Saying that-the firm saying that small businesses are hiring, that they hired 93,000 people-that 93,000 jobs were added last month. This is the biggest number that we've seen in three years. And think about it-

QUEST: Right.

KOSIK: When we see that there is hiring in the small business area of the economy that is a huge engine of growth for the economy. Wall Street likes to hear that, Richard.

QUEST: Ah, December the 1st, Wall Street traditionally also likes December as a month for stocks. Now, if we take that into account traditionally then we should be looking at what sort of gains for the year?

KOSIK: Yes, I mean, you know, if you think about it, if you look back in history the bulls had definitely not been shy in the month of December. In fact, December, historically is the best performing month of the year, for stocks, in the U.S. You know, the S&P 500 has added almost 2 percent on average since 1945.

And then you think about where we were in November. You know, this is a mid-term election year. And historically December has performed well after mid-term elections. What also happens here, Richard, that we can't forget is just what happens right here on Wall Street. I mean, we are getting to the end of the year. These investment portfolios, they have to be dressed up. It is called window dressing. And that is also what you wind up seeing at the end of the year, where these investors are willing to place some bets and make their investments look good for the new year, of course, Richard.

QUEST: Alison Kosik, who is in New York. And we'll follow very closely, Alison, in the days and weeks ahead. Many thanks, Alison, in New York.

Now the market numbers might look better than they have been in recent weeks. But the debt crisis in Europe continues unabated. There is speculation that the European Central Bank has now gone one stage further and has now gone beyond bailout and is purchasing bonds in the market. ECB decision makers are to meet in less than 24 hours, in Frankfurt. They will probably leave interest rates just where they are and most of the liquidity programs unchanged.

But we will be watching to see if they do announce a new bond purchase program. After all, Jean Claude Trichet, the president of the ECB, has warned that investors should not underestimate the fire power available to the central bank. Also a top U.S. Treasury official will be flying over for consultations with the bank.

Now, this of course, all has to be put into the picture in relation to Portugal. Portugal is still very much on the minds of the markets as they traded today.

What was Portugal's-what was the Portugal factor, Jim Boulden?

JIM BOULDEN, CNN FINANCIAL CORRESPONDENT: Well, as we were talking yesterday, about the Portugal factor we would have been saying all bad news, wouldn't we? We would be all worried about what was going to happen today. What happened today is Portugal got a bond auction off, and we should say off successfully. Able to raise $655 million in its one-year Treasury T-bills. But, of course, there is always a but, you always sell the bond, it depends on the yield. And the yield, certainly the borrowing costs went to 5.28 percent. That is what it took for Portugal to get this bond off. And it was oversubscribed.

Now, compare that to 4.8 percent in a few months ago. The last time it had a bond auction. So, 4.8 percent up to 5.2 percent to get this off, this is what we talk about when you talk about rising bond yields. Many people say that is just too high for this government to continue on doing what it is doing. Of course, that is what happened with Greece. That is what happened with Ireland. And now, of course, we are talking about Portugal.

Now what also was a factor here, S&P put Portugal in a credit watch last night. It said the bank funding is unsustainable and it said that it is down grading Portugal's growth forecast. That is S&P. Didn't down grade Portugal yet, but we are talking about more and more worries about Portugal.

QUEST: The downgrading of growth forecasts is more important than it might suggest. Because it is only optimistic forecasts that have led anybody to assume that these countries will be able to repay their debt.

BOULDEN: And recover the economies lower unemployment, get more money into the bank. Be able to sustain these cuts that have been coming in the budget deficits, and tax rises, without inflation, and without the economies going into recession again. You need to have all that happen in order to get all the money back.

QUEST: OK, this is the most unfair question of the day. Is there still the feeling in the market that Portugal is next?

BOULDEN: Today is a one-day event. We should not take this and say this is the end of this, this is the end of that. You and I have sat here and we talked about Greece, Greece said it didn't need the money. Ireland said it didn't need the money. The question everyone has here is, does Portugal take the money now before we get into a crisis, or do we wait for the inevitable anyway?

Now I'm not going to predict the way it is going to go.

QUEST: You just have, the inevitable.

(LAUGHTER)

BOULDEN: Inevitable if you follow the pattern that we've seen. A lot of people are saying let's stop country by country bailouts. Let's do a European wide bailout. Let's have a European wide system and maybe we'll hear a bit more from Mr. Trichet, tomorrow, about that.

QUEST: All right. Many thanks.

The question of what happens in Portugal is very much the issue, and was the issue in the markets. I turn to Justin Knight, the head of European rate strategy at UBS.

Why was the cost of borrowing high for some countries, not for others? And why were the markets so interesting?

JUSTIN KNIGHT, HEAD OF EUROPEAN RATES STRATEGY: The ECB had been aggressively buying bonds in some of the markets, in particular, Ireland and Portugal. And then on top of that there was a lot of speculation in the market, that the ECB might come and start buying markets like Spain and Italy. And in particular, Spain was a beneficiary of this. Of course we have the ECB meeting tomorrow, and the idea is that maybe Mr. Trichet will announce something to that effect tomorrow.

QUEST: Why would the ECB be doing this? I mean, we're familiar with quantitative easing and our policy of easing monetary policy. Is that the reason, or is it just to provide liquidity.

KNIGHT: No, very much it is not the reason. The ECB is not trying to-in its bond bank (ph) buying program is not trying to increase the monetary base, and inject money into the system as the Federal Reserve has been doing or the Bank of England. It is there to steady the bond markets, to create liquidity where liquidity hasn't been, and to really stop things getting out of control.

QUEST: Is it working is the short answer? Trichet's comment, the mere threat, the potential and the rumor, but is it working?

KNIGHT: Well, yes it is to the extent that when the ECB comes into the market it works. And the ECB has very deep pockets in that respect. But this can only ever be a temporary measure. The ECB has told us, itself, on many occasions that it sees the problem of the sovereign debt crisis being one of government's not of the central bank.

QUEST: So, Ireland has it bailout. Portugal and Spain both say they don't need it. The market is giving a view that it doesn't believe that.

KNIGHT: I think it is wrong to look at the market as a single entity that it has a single belief.

QUEST: Good point.

KNIGHT: It is much more that investment funds are scared. This is about fear, not greed. This is not a big sort of speculative move. It is that bond-government bond funds, who own these bonds, just don't want to own them because they are no longer behaving like government bonds. They're much too volatile.

QUEST: I've seen this phrase used again and again, and many viewers may be wondering where indeed the truth lies in this. Is this, at the moment, a sovereign debt crisis, a credit crisis, or a liquidity crisis? Or all of them?

KNIGHT: I think they are all morphing into one now. Of course, what happened in the case of Ireland was, for example, was that Irish yields, the price that Ireland would theoretically have to pay to borrow money, rose to a point where the market saw it was unsustainable. Ireland then was-went and requested aid. And is receiving it, or will be receiving it. So, at some point that idea of the difference between liquidity and solvency merges into one.

QUEST: I was just looking at your report. That you have done (ph). "We believe the crisis will reach a point at which further policy response will be needed and implemented." You say, in a report, or that (UNINTELLIGIBLE) in a report today. What policy response will that be?

KNIGHT: Well, we think there is-if you want to keep the euro as an existing currency and you want to prevent the risk that it falls apart or that countries leave it. There is only one policy response that will ultimately solve this crisis. And that is fiscal union of some kind. A very rudimentary form would be to create a system of cross guarantees within the euro area. So effectively-I know it is politically very-

QUEST: You have just pushed

KNIGHT: -controversial.

QUEST: You have just pushed a nuclear button, haven't you?

KNIGHT: Well, yes, but if the alternative is euro break up, then it is acceptable in our view. And acceptable to a majority of Northern Europeans.

QUEST: Isn't the then-isn't the truth, Justin, that there is no risk- well, there is no realistic possibility of the euro collapsing?

KNIGHT: There is a possibility, but we don't think it is-it is very probable. After all governments can do a lot of things to buy time and institute the kind of measures that I have been suggesting. And as I say, countries like Germany, the German people as far as I'm aware are very, very conscious of the idea of further stability, European integration, etc cetera. I mean you could say that the whole rational of modern Germany is built on stability.

QUEST: A robust discussion with Justin Knight, head of European rate strategy at UBS. And good to hear his analysis on what they expect at UBS.

European stocks put in a strong showing.

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All the major markets gained ground. Bank shares were amongst the best performers. Automakers also had a good session. That big buying spree followed several days of losses. And those are the numbers that you can see. Not often you see a good strong day; 2 percent gains for London and Frankfurt, and similar gains now, of course, being seen in New York.

This time tomorrow you can hear from Jean-Claude Trichet, the president of the European Central Bank, on QUEST MEANS BUSINESS. On Thursday at 7:00 p.m. in London, 8:00 p.m., in Brussels and in Paris. We will be hopefully interviewing the president of the ECB, on this show, tomorrow night.

Now one thing to bring to you attention, Germany has been at the front of the pack calling for Ireland, Greece, and the Euro Zone's other debilitated members to take their painful austerity. But, of course, it is Germany that has to do the bailouts and has to provide most of the money. Germany is the largest, percentage-wise, within the ECB.

So, have a look at this interesting article that I've read, that says Germany is doing just that. Do you think Germany is keeping other countries in check, or strangling the euro? You can read this article about Germany's role and the bailout, Twitter.com/RichardQuest. Of course, you'll be come a friend, or you'll join, or you'll follow, or whatever it is. And you and I can have good discussion on economics in the months ahead. And also a variety of other things.

OK, as we carry on, on this program, it is called the moment of truth report. A plan by the commission, appointed by President Obama, to get America's deficit down. We're live in New York with the details in a moment.

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QUEST: Now, if you look at the amount of money, some $3 trillion, was spent by the U.S. Treasury and the Federal Reserve, in terms of bailing out the U.S. economy. The Fed, under orders from Congress, today revealed the recipients of much of that money, in the aid, during the market crisis of the past few years. These are looking on the Web site, you can see the detail. It is mind numbing, the amount that is on there. Bank of America, Wells Fargo, are amongst the biggest borrowers. U.S. aid went to foreign institutions, or the U.S. divisions of them. Like Deutsche Bank, UBS, Credit Suisse.

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Maggie Lake is in New York, and joins me now.

But, I mean, I leafed through-I didn't understand much of it. And I couldn't work out why they were getting the money. These were all healthy institutions. What was it all about?

MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: Well, you say they were healthy institutions. We don't know. And that is part of the mystery that we are going to try to unravel over the next few days. And don't kid yourself, it is going to take days to sort of wade through all of that, you are right; a massive amount of information coming out all at once because they had to. I think it is something like 21,000 transactions.

A couple of things that sort of popping out in the headlines right away, Richard. And you mentioned one of them. The fact that so many foreign banks use some of those emergency facilities during the crisis is a bit surprising to many. And it is all of Europe's best known, you mention Barclays, UBS, Dresdner Bank, Soc Gen. In fact, Barclays hit it before Bear Sterns did, if you can believe that.

But that is not the only issue. Also that just the scope of this. It wasn't only financial firms. You have a lot blue chip institutions.

QUEST: But, yet-but-

LAKE: GE, McDonald's, Verizon, Caterpillar, all going to it. What we don't know, Richard-I hear you barking-is whether they were just taking the opportunity.

(LAUGHTER)

LAKE: Because it was a good deal. I mean, it was good rates to sort of get that good funding and use it for future plans. Or, whether they were needing it because they were financing themselves. Clearly it was in some cases opportunistic, and in other cases, just folks who actually couldn't hit the private market.

I don't know if we are ever going to have the answer for that from this information the Fed released. But clearly the Fed was providing liquidity to the entire world, during that crisis.

QUEST: All right. All right, but I'm going to get in here.

So we don't know why. And the variety from the towels, to the taft (ph), to the mortgage-backed securities programs. I mean, these were banks that had their assets on their books that they were shunting them across. I looked at one number about what percentage the banks-the Fed was buying in terms of mortgage-backed securities. But a lot of these banks were not in trouble, Maggie.

LAKE: Yes, I mean, listen, we already heard, some of this, the banks themselves have talked about it. And you have heard, J.P. Morgan, for example, come out and say, we did it because we were doing it out of good faith. We were asked to participate so no one was singled out, so some of them were doing it because of that. Again, some of them because they were good rates. I mean, it was cheap money being offered out there. Why not take advantage? But then, of course, there were others who needed it. Remember, Richard, it wasn't all rosy. I mean, the private sector liquidity shut down. So the Fed was the only lender out there.

And there are going to be questions asked and this is going to come up in analyst's calls and conference calls. Why did you need that? I mean, it is a little bit backward looking but people are going to want to know what kind of conditions these corporations, as well as banks, were in. Because you want to know how much healing has to be done? And we're only about two years out. So it is going to be very interesting to see how these executives respond to those questions.

QUEST: I was fascinated today, Maggie, the presidential commission on the deficit, or whatever it is officially called, has given its final report. It is not very different to the preliminary report. But it does talk about the need for tax rises, spending cuts, is there any chance that this report deals with the long-term U.S. deficit and gets passed?

LAKE: It is a starting point is what we are hearing, Richard. I mean, listen, this thing may never get out of committee because it is tough. We are talking about really touchy issues. But there is a dialogue. One of the things that is most striking, you are right, it is very similar to versions that were out there before, is the tone. You only have to look across the Atlantic to see what is coming our way. And there is this sense, from the tone, that lawmakers are really starting to get their head around that. I mean, the report itself is called "The Moment of Truth". It doesn't get much more dramatic than that. But all of the language being used is trying to impress upon lawmakers and the American people that the time to act is now. Have a listen to what Alan Simpson said.

(BEGIN VIDEO CLIP)

ALAN SIMPSON, U.S. COMMISSION ON FISCAL RESPONSIBILITY & REFORM: We all know the figures, and we all know the math, and the fact really is, this is it. No more fun and games, smoke and mirrors, alchemy, trickery, cunning, CYA, demagoguery, and making promises we can't possibly keep.

(END VIDEO CLIP)

LAKE: It is the time to govern and it is the time to own up to our problems. Look at what they are talking about, $4 trillion in cuts. A lot of it coming through spending cuts, but they are also talking about tax hikes. You know that how that goes over here in the U.S., raising the retirement age. I mean, the feeling is that if we don't start to do something we are going to end up in the same situation as Europe. Whether they can get lawmakers to go along with that is another story. But even the critics and skeptics out there say, listen, it is at least a tangible starting point.

QUEST: Maggie Lake, with the story of the debt deniers, in New York. Maggie, many thanks, indeed.

The 17th Russian banking forum is taking place in London and we thought it's a fine opportunity to find out how their bankers view the growing financial uncertainty surrounding Europe.

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QUEST: Unsurprisingly, uncertainty currently surrounds the future of the Euro Zone. We have talked about that a great deal, growing fears that Portugal and Spain could go the way of Ireland and the ominous threat of contagion in the wider economy. The question, of course, for Russia, which is enjoying something of a boom and the back of high commodity prices, is how they will view the situation. We went to the Russian Banking Summit, taking place here in London, to find out.

(BEGIN VIDEOTAPE)

MICHAEL O'SULLIVAN, CREDIT SUISSE: I think we can say that by comparison to the other emerging countries, and even more so by comparison to some of the developed countries, Russia is in a very, very healthy place in terms of its government balance sheet.

ANDREI KLEPACH, RUSSIAN DEP. ECONOMY MINISTER: One of the lessons of the crisis, it is a messy situation (UNINTELLIGIBLE) and enterprise need new investment, new capacity, new product, and they also need banking credit or market financing because they have not enough level of profitability. Maybe except only oil and gas sectors.

BELLA ZLATKIS, DEPUTY CHAIRPERSON, SBERBANK (through translator): The Russian banking sector is in a better state than you might have expected given the depth of the crisis. It stayed afloat, profits are rising, its assets aren't in bad shape. And we are taking serious measures to combat debt problems. But there are still a great many questions on cleaning up the banking system of its bad banks and its bad debts.

SERGE DUBININ, VTB CAPITAL: Not enough to stimulate the transformation of the savings, national savings and investments. So our companies go to the other European markets and world market, and Chinese, even, markets looking for the money.

(END VIDEOTAPE)

QUEST: The Russian Banking Forum, and there was Dimitri Pankin, Russian's deputy finance minister, who said his job is particularly interesting at the moment. CNN's Jim Boulden asked him why.

(BEGIN VIDEOTAPE)

DIMITRI PANKIN, RUSSIAN DEPUTY FINANCE MINISTER: Interesting for us is that we have to find a way how to finance this deficit. It is an interesting job. It is an interesting challenge, because for several years we have budget surpluses, and we have only one problem, how to invest or surplus assets. Now, we have to work how to find money from the markets to finance.

BOULDEN: That is a nice problem to have, isn't it? A surplus?

PANKIN: Yeah, yeah, surpluses we don't have, but we are quite comfortable with existing debt levels. And I think that market assessment of Russian financial situation is really very good.

BOULDEN: You said that Russia may be too relaxed when it comes to cutting the budget deficit. What do you mean?

PANKIN: I think this is a problem for all ministers of finance. Because all governments, all ministers, would like to spend more money, social spending, investment spending, every time we have a very serious project we have political obligation to fulfill. And only one ministry is responsible for balancing the budget and for cutting all expenditures. And this is a role for ministers of finance every time.

BOULDEN: When you go out and talk to people, are there people still remembering that Russia defaulted on its debt 12 years ago. Do you still find it hard, when you are talking to investors, or possible investors?

PANKIN: You know, in '98 my feeling was that all life, financial life in Russia is over. So I couldn't imagine that in maybe two or three years it would be possible to talk about investment in Russia. So form that point of view I am quite surprised that our memories are not so long, but nevertheless, everybody remembers '98, everybody remembers some lesson from '98. It is all a kind of complicated situation.

BOULDEN: When you look at, say, all the issues with the euro, possible slowdown in China, geopolitical, falling dollar. What worries you?

PANKIN: You know, I think a major problem is just instability. Because it is extremely difficult to make any projections, and such a situation where nobody knows who will be next, Spain, Portugal, Ireland, and what the ratio between euro dollar, or what will be the interests rates, how it will resolve the debt situation in United States, Japan with 200 percent debt to GDP ratio.

So, a lot of serious problems in international finance, macro economy, and nobody knows exactly which one will explode, and when it will explode. It could be, it could be, but it could no.

BOULDEN: Do you think the euro will survive? I mean, blunt question?

PANKIN: We are optimistic. We think the euro has a strong basis, strong basis of European countries, we think the intention of European countries to resolve the problem, we could see that a mechanism is creating, and so in that case, I think everybody understands the problem. Everybody sees this problem. And they have some mechanism to resolve this problem.

(END VIDEOTAPE)

QUEST: That is Jim Boulden at the Russian Banking Conference.

So, we've done one of the BRICs, that's Russia. When we come back after the break, two other BRIC countries -- in this case, China and India.

Who is more likely to win the race to superpower status?

Is it China's hare or India's tortoise?

An interesting thought, after the break.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.

This is CNN and here, on this network, the news always comes first.

And there are two developments to bring to your attention tonight concerning WikiLeaks. The first is that apparently Amazon, which is one of the host servers for the WikiLeaks information, the cables the -- from the U.S. State Department, apparently tonight, Amazon has announced it is going to stop hosting WikiLeaks and the cables -- the -- the diplomatic cables on its servers. We're waiting for further details and further confirmation on that.

But if that is true, then obviously that is a blow to -- to ordinary people logging on and reading the cables, since they won't be able to access them directly.

The other major development tonight, WikiLeaks' Web site's founder is a wanted man. Interpol has issued a red notice, an international alert, asking nations to locate Julian Assange. The alert is not related to the release of the confidential U.S. government cables. Instead, it was issued at the request of the Swedish government on allegations of sexual assault dating back to August. Mr. Assange maintains his innocence.

You may be well aware there are fresh blasts of snow across the European continent, causing headaches and chaos for travelers and residents, including Germany, Switzerland and the U.K. A handful of airports have been shut down. The biggest closure, London's Gatwick. Forecasters say freezing temperatures won't subside until next week. Now, it's the U.K.'s heaviest and most widespread snowfall in 17 years and it's not even winter.

Egypt's largest opposition group, the Muslim Brotherhood, said it will boycott parliamentary runoff elections on Sunday. The party lost all 88 of its seats in voting of the first round. A party member says the boycott is a protest of election irregularities.

A mixed progress report on today, World AIDS Day. The U.N. says new HIV infections have declined by almost 20 percent worldwide. But the estimated number of children living with HIV/AIDS has increased by 46 percent across 11 Asian countries. One expert says complacency among new people is causing -- young people -- is causing a new wave of epidemic and infection in the U.S. and in Europe.

So, there were figures out today that reveal sha -- China's factories cranked up production in November. The official Purchasing Managers Index rose to a seven month high. It came it at a much better than expected 55.2.

Now that's a -- a number, but what does it mean?

It shows and it highlights a growing disparity between both India and China, two major countries, in the way they are now a duopoly in the race to be the next superpower, at least on the economic front, especially when seen against the sluggish growth of Europe and the U.S., along with Asia.

Look at the China GDP growth -- 9.6, 9.1 and in 2010, estimated at 10.5. And China, you should be aware, has already taken steps to cool down the economy.

Now, if you look at India, the eleventh largest economy in the world. And an interesting factor, but much lower levels in '08, when things were heating up elsewhere or maybe just at the top of the market; '07, that's the recession. And in Indian terms, 5.7 is virtually recession territory. And 2010, 9.7.

So India has broken the 8 percent, which they always considered to be so important, but still lagging behind China.

It raises the question, which country is likely to be the -- in the race to be the next superpower.

My next guest is the founder and managing editor of Network 18, India's largest TV news and business network.

If it all goes wrong, I'll ask him for a job.

He's written his first book, entitled, "Superpower: The Amazing Race Between China Hair and India's Tortoise".

Many thanks for joining us, Raghav Bahl.

RAGHAV BAHL, FOUNDER, NETWORK 18: Good to be here.

QUEST: Who's going to win?

(LAUGHTER)

BAHL: Well, I -- I -- I say it's going to be 50-50. And I say that because while China is far ahead in terms of size, as you've just shown, as well -- it's four times the size of India's economy -- some of the institutional strengths of India are now coming up. And -- and, you know, the number that you showed, actually, if you just compared the last quarter, the difference in the growth rate is now down to less than a percentage point.

So, therefore, it is now everyone's case that India is going to begin to grow faster than China.

QUEST: But India's growth has, you know, we see it time and again, seems to be chaotic...

BAHL: Yes.

QUEST: -- rather than China's very forceful, very deliberate planned economy.

BAHL: Well, yes. India is a democracy. It -- it's an economic democracy, as well. Ninety percent of India's economy is in private hands. And it's an -- it's -- it's a growth which is happening from below. So it is chaotic. You know, different...

QUEST: But that also means it doesn't reach its full potential.

BAHL: That also means, perhaps, also, that the -- the growth is far more robust and based on stronger foundations. But you are right, until India invests in infrastructure on the scale on which China has done, the absorptive capacity of India's economy is not going to come to full potential.

So India may take 10 years longer, because we are talking about relative growth rates. You may reach that point 10 years long -- later, but it doesn't mean that you won't, is -- is the point.

I think -- I think it's the robustness of the foundation and the fact that...

QUEST: It could be too late if China is there first.

(LAUGHTER)

BAHL: Well, China has done a dramatic job in -- in growing its economy.

QUEST: You're not impressed though, are you?

BAHL: I am -- I am very impressed. All I'm saying is that size cannot be the only barometer. Institutional strength, some of the other macroeconomic balances -- remember that China will now have to undo a lot of the things that China has done to reach where it has. You know, it has to bolster its consumption. It has to cut down relatively on investment. It has to revalue its currency, and that will have major implications for China.

QUEST: Would you open a network in China if you could?

BAHL: If I could, yes, of course. But, you know, there you are. You are not allowed to. So there are areas and areas of China's economy which are so driven in -- by the state and are, therefore, monopolistic in character. And we all know that monopolies ultimately breed inefficiency.

QUEST: Many thanks, indeed.

Very interesting.

Thank you for coming in.

BAHL: Thank you very much.

QUEST: We will talk again.

Raghav Bahl joining me on that.

Now, as we continue on this journey tonight, MySpace has lost out in the social networking popularity contest. In a moment, we'll look at why Facebook might be the next in line for a de-friending.

(COMMERCIAL BREAK)

QUEST: Now, these are two familiar names -- Facebook and MySpace. Let's look at MySpace just for a second. MySpace could soon be in new hands. The gorilla of social networks, who's owned by News Corp, is now finding -- News Corp is finding it a bit of a money drainer. The company is considering selling MySpace. It's second -- it paid $580 million for it back in 2005. In 2007, it was valued at $12 billion. You don't need to be a social media guru expert to know it wouldn't get anything like that now. He might get his money back.

But MySpace, the gorilla that is now possibly the mouse, because this, the king is dead, long live the king -- Facebook is now considered to be the big one.

Facebook has 151 million active users each and every month and half a billion users overall. That's the scenario of the two at the moment.

But what happened to one, MySpace, might be about to happen to Facebook.

Is Facebook destined to be the undisputed champion for long?

If history is anything to go by, it won't last. Its position is untenable. That's not me saying it.

Jeffrey Cole of USC's Annenberg School Center for the Digital Future.

Now, he predicted MySpace's decline four years ago.

And Jeffrey told me that all social networking sites, no matter how big, never stay on top for long.

(BEGIN VIDEOTAPE)

JEFFREY COLE, USC ANNENBERG SCHOOL: Well, we really believe all social networks have obsolescence built in. We saw this from Geocities moving into Friendster, Friendster to MySpace. And we talked a long time ago that, to a teenager, an online community is like a nightclub. And when the nightclub becomes too popular or the uncool kid starts showing up, you're out of there.

And, of course, what's the worst thing that could happen to you as a teenager at a nightclub?

So we think Facebook will fall victim to this, as well. It's going to take longer because never has any network had 500 million people. We think it will fragment into smaller communities rather than being replaced by one big one. But we think it's an inevitable process.

QUEST: And I think of back to the early days of the Internet and AOL and how we were -- we all used that and have moved on, in some ways, from there.

I do wonder, we're all surprised by what you've just said and what you've -- your research.

Should we be surprised?

COLE: No, I think this is an inevitable part of what we see, especially among young people, because they represent trends and developments for the future. But we're seeing all kinds of -- of changes. You know, we're seeing teenagers no longer wearing watches. We'll see if there's a watch industry or whether there's an economy of Switzerland in another 30 or 40 years.

But there's lots of these changes. And some of them are trends and fads and are fickleness and some really represent profound change.

We think the importance of social networking is permanent. We think the heaviest users of social networks are people in their 60s and 70s. We see that. But we think which networks really dominate, that will always be a changing landscape.

QUEST: Now, let's just talk about that, because we -- because a changing landscape, where things can come out of the blue, like, for example, Twitter, arrived on the scene, that means that you and I now are completely incapable of saying what will be the next big thing?

COLE: Absolutely. And I'd be suspicious of any who knows what they think the next big thing will be. I think it was 10 years ago, Bill Gates was asked, you know, who kept him awake at night, was it AOL, was it Time Warner, was it News Corp?

And he said, I think very presciently, that none of those companies bothered him. What kept him awake at night were the two guys in a garage in the Silicon Valley who he had never heard of. And, of course, those two guys happened to be Sergey Brin and Larry Page.

We don't know who the next guys are going to be. That's part of what makes this so much fun. But it's not predictable. It's going to take left turns constantly.

QUEST: Are you prepared -- and I think I know the answer to this -- but are you prepared to say how long you give Facebook?

COLE: No, I don't know what -- well, keep in mind, first of all, that MySpace hasn't gone away. People still have their MySpace pages. It's just receded into the background.

I think Face -- Facebook is going to continue to grow for the next couple of years. My best guest -- and it really is a guess -- it will take about five years for Facebook to begin to fragment and to begin to see some of the cracks.

And as I said, I think it won't be replaced by one big community, but by smaller communities. But I think it will grow for another couple of years.

(END VIDEO TAPE)

QUEST: Fascinating discussion.

Jeffrey there talking about Facebook.

And we'll hear from him in the months ahead, you can be sure of that, on this program.

One of Facebook's founders has already moved on to new pastures.

Chris Hughes told Maggie Lake that his new project isn't about poking friends, it's about connecting people who want to make a difference.

(BEGIN VIDEOTAPE)

MAGGIE LAKE, CNN CORRESPONDENT (voice-over): He's not even 30 yet, but Chris Hughes is already a technology heavyweight. In 2004, he worked with college pal, Mark Zuckerberg, to launch Facebook, jump-starting the social media revolution.

A few years later, Hughes moved on to politics, spearheading Barack Obama's online fundraising and social networking efforts, and, in the process, redefining the way U.S. presidential campaigns are run.

Now, the North Carolina native is turning his attention to charity.

CHRIS HUGHES, EXECUTIVE DIRECTOR, JUMO: And what we're trying to build is a social network that helps people find, follow and support the causes and projects that are interesting to them personally.

LAKE: Jumo, which in one West African language, means, "together in concert," is not the first online site helping to promote charitable causes. Sites like GuideStar and Charity Navigator also evaluate and rate non-profits to help donors make more informed decisions.

But Hughes says Jumo, a non-profit, is different. Its primary objective is to build communities of people passionate about causes. He calls it a site for people who want to change the world.

HUGHES: It's not always about money. The -- the first and most important thing that a person can do is find a cause or a project that's personally relevant to them. And once you've found it, we want to help you keep up with it, so you know you can see the videos, the blog posts, the news stories that come from the organization or that people are creating about it. And then, if you want to support the organization by volunteering or by donating or however you choose, we want to make that possible, too.

HUGHES: Bringing people together through technology has always been a passion for Hughes.

HUGHES: In the case of Obama, it was technology to help people self- organize on behalf of the president. In the case of Facebook, it's the technology to help people connect to their friends. So across the board, though, I really view technology as a tool, ultimately, and something that has to help enable everyday people to live better, fuller lives and, hopefully, particularly in the case of Jumo, help them connect in a meaningful way to the rest of the world.

UNIDENTIFIED MALE: And they all do it.

LAKE: Days before the Jumo launch, the offices are a buzz of activity. For Hughes, the excitement of a startup can't be duplicated.

HUGHES: With Facebook, we were building an application just for a few dozen users. There wasn't a lot of buildup. It was just for our friends at Harvard. Jumo is -- it's a bit different because we're taking on a similarly large problem, but a little bit more of a mature organization, a little bit faster. But, you know, startups -- I love working in the startup world. It's -- I mean you can do so much with a few really smart engineers and that -- that potential is enormous.

LAKE: Enormous potential for a large and challenging goal. Hughes is confident the power of the social network can be harnessed for social good.

Maggie Lake, CNN, New York.

(END VIDEO TAPE)

QUEST: And when we come back, I'll have day two on the market, where the Dow Jones, at the moment, is having a rollicking good session, up more than 200 points. And it's only midweek.

(COMMERCIAL BREAK)

QUEST: The markets open and doing business. There are just, oh, just over an hour to go. And the Dow Jones, on the back of good economic news, encouraging jobs reports and a general feeling of confidence, which has all boosted things by the best part of 2.25 percent, 11252, which has reversed the trend in -- of recent days. The Dow is enjoying somewhat of a robust performance. And, as I say, there is just an hour and 10 to trade.

Those who are in New York for that hour and 10 to trade, well, they have got more problems than the Dow Jones. Take a look at the these live pictures from New York at the moment. If you like fairly carefully, it is the Empire State Building. A severe thunderstorm is in effect for the whole city, according to the National Weather Service in the U.S. Storms, snow, winds -- it's got the whole lot there -- Guillermo...

GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes.

QUEST: -- is at the World Weather Center.

What's going on?

ARDUINO: It's...

QUEST: Storms on both sides of the Atlantic?

ARDUINO: Yes, actually, it looks better. That picture is much better than what I see on the maps, because we have nasty, nasty weather here in the South that actually moved northward. And now it's going through New Jersey. So you see that picture now live from New York, but it's nasty in Newark.

Actually, do you want to know what kind of delays we have?

At Newark, four hours, 31 minutes; at JFK, three hours, 56 minutes; LaGuardia, five hours, 22 minutes; and at Philadelphia, one hour 24 minutes.

Isn't that nastier than the picture?

Especially in here, with all the -- the hundreds -- the thousands of people being affected right now because of the heavy rain that we see in the area. It will continue to move forward, actually, to the northeast.

I have reports, actually, Boston, Newark, especially Newark, with intense rain. Boston has rain. LaGuardia has rain. JFK has rain. And then, you see it here, it's about to end, though. You see the tail end of it. That's why Philadelphia is getting better, one hour and 25 minutes of delays, only. And then that, as soon as it's over, it's going to improve in New York, too.

That we have big time delays because of the volume of all those flights trying to make it there and that they can't. So they -- they are somewhere else waiting to get permission to land.

Pittsburgh, Cleveland and Indianapolis, and here in Michigan, all over. Ontario, Canada with snow all over, too.

What about Europe, because it is actually bitterly cold. Look at these temps. I got an e-mail from Dekink (ph) in Norway. She said: "What about minus 23 degrees? That's what I had today."

So when we look at Munich with 17 degrees negative, the average is minus two, poor -- poor Dee (ph), one of our most faithful viewers of CNN International.

Also, the snow accumulating big time in Scotland. You see 44 centimeters. We're going to see some more, actually. And I'm going to focus a little bit on London now. We're going to see some more snow, probably for the remainder of tonight. I think that Friday is going to be extremely cold.

And you know what?

They got more snow here in the south. You see all the accumulations here.

Why?

Because the jet stream here is allowing those systems to dump more snow. So for the time being, we're going to see pretty much the same pattern, the same pattern. And that includes that temperatures are going to be emphasized even more. These are 12 below, it's average, 8, Richard, below average in England. So it's going to be nasty.

QUEST: Yes.

ARDUINO: Look, this is the radar. That's all snow, especially in Scotland. You know, you're from Northern England, right?

QUEST: Yes.

ARDUINO: That's...

QUEST: I'm from Northern England.

ARDUINO: From Liverpool. It doesn't look very nice here. But London is fine. So you chose well.

QUEST: Many thanks, indeed.

ARDUINO: You're welcome.

QUEST: Guillermo at the World Weather Center.

Nasty weather wherever you are.

When we come back in a moment, there'll be a Profitable Moment, and it's all, of course, about Facebook.

(COMMERCIAL BREAK)

QUEST: And so tonight's Profitable Moment.

MySpace, Facebook or anything in between, it is a pretty bold idea to suggest that Facebook, indeed, all these social media networks, have obsolescence built into their very existence. These social media networks start as the next best thing. They grow like topsy. We all join in. We become friends with each other. We post each other. We post pictures that probably had best not been posted in public.

And then, as they move on, we wilt like the leaves of autumn when the next big thing comes along. It's an interesting thought that Facebook, with its 500 million users, may take longer, but eventually it will succumb. Oh, if we could only predict what comes next.

How often have you thought, if I'd only known what was coming next?

Something like a Google or an Apple?

The truth of us, though, most of us are content to follow rather than lead.